RBA lifts cash rate as Middle East war continues: Now what?
As fuel prices rise, so do concerns about inflation.
The Reserve Bank of Australia (RBA) has made the call to increase the cash rate to 4.10%, just a month after it lifted it to 3.85%.
Unfortunately, this means your home loan rate is about to increase.
It's not too long ago that interest rates were going down, so why are we climbing back up so steeply now?
And crucially, if you're worried about your repayments rising, what can you do about it?
Ready to look at refinancing?
Compare other home loan rates to see if you could be on a better deal.
How we got here
Towards the end of last year we saw the inflation rate creeping above the RBA's target range. With no sign that it was about to start decreasing, the RBA made the decision to increase the cash rate last month.
Although it was likely to wait and take stock of the numbers before making any other cash rate decisions, the conflict in the Middle East changed things.
Higher costs for fuel and fertiliser are having an impact on prices across petrol, groceries, farming and hospitality. This only adds to the inflationary pressures we're already seeing, and so economists began to suspect a rate increase was on the cards.
What steps homeowners can take now
2 interest rate increases in a row can feel daunting. That's a big bump to a home loan repayment.
If you're on a fixed interest rate for the foreseeable, you don't need to worry. Your interest rate won't change.
If you're on a variable interest rate, it will likely change. So, the first thing you need to do is make sure you know what interest rate you're on.
Rate change announcements will start to trickle through soon, so keep an eye out for communication from your lender.
Once you have that, you have 2 options:
- Call your current lender and see if they have a cheaper rate they can move you on to. Many lenders offer new customers special rates, but you can call them up and ask to have that rate too.
- Shop around for lower interest rates elsewhere. Take a look at refinance rates, remembering that for the next few weeks those are subject to change. But if they're lower than the rate you're currently on, they'll probably end up lower than the rate you're about to be on too.
Not everyone is eligible for refinancing though, such as recent buyers with low equity or borrowers with lower credit scores.
In this case, speak to your current lender and if they can't lower your interest rate, see if they can support you in other ways.
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